Jul 08 2009
The Recovery and Jobs
The U.S. government has done a lot to make sure we have an economic recovery, but in the midst of this supposed recovery is the realization that many of the jobs that have been lost in the downturn may never be recovered. Unemployment rates are reaching historic highs (not always 100% accurate but sobering anyhow) and we have to face the fact that the jobs of yesterday will not be the same jobs as tomorrow.
Many companies in their current form will die, either close shop completely or go bankrupt. Any companies that survive will need to radically reformulate their business model to survive (the big three automakers as a great example). Payroll is the single biggest expense that any business has. It costs major money to pay people to run your business. Salary/wages as well as extras like health insurance, pensions and 401k’s, all of that stuff factors into costs. If a business isn’t making enough profit to support their payroll, then you either have to make more money or find a way to cut payroll. If the economy is such that making more money would be difficult, then you will see layoffs, wage cuts, cuts in benefits, etc.
Demand for goods and services will eventually return. It may take many years for that to happen, but when it does companies will start hiring again to meet the demand. Companies will need workers with better skills and different ones at that. It all comes down what skills you can offer your employer. The skills that used to be in demand may not be the same ones in demand in the future. If you are in the category where you have minimal skills to offer an employer, it’s going to become increasingly difficult to get meaningful employment in the new economy of the future.
We have lots of people in this country who fall in the minimal skills category. Many people will be reluctant to do any skills upgrading due to age, lack of funds, etc. People working, earning an income and spending what they earn, is what drives our economy. It’s going to be hard to drive the new economy without enough people working. The government can only continue to hand out help for so long and to so many people.
The employment mix that we have in this country needs to be a healthy mix of skilled and unskilled opportunities. I see that balance being badly upset and its going to make it difficult to get everyone back to work.